============= Page 1 of 75 ============= i J E0004400921 Finance Committee Meeting October 11, 1999 Committee Members =XH002-00918 Mr. Herbert S. Winokur, Jr., Chairman Mr. Robert A. Belfer Mr. Norman P. Blake, Jr. Mr. Ronnie C. Chan Mr. Jerome J. Meyer Mr. John A. Urquhart GOVERNMENT EXHIBIT 512 Crim. No. H-04-25 (S-2) ============= Page 2 of 75 ============= m C) 0 0 .p .p 0 0 0 N N Agenda EXH002-00919 ============= Page 3 of 75 ============= AGENDA Meeting of the Finance Committee of the Board of Directors of Enron Corp. October 11, 1999 Enron Corp. Boardroom Houston, TX 1. Approval of August 9, 1999 Finance Committee Minutes Mr. Winokur 2. Chief Financial Officer Report Mr. Fastow 0 LJM II - Approve for Recommendation to the Board 3. Treasurer Report Mr. McMahon O Revision of Equity Shelf Registration - Approve for Recommendation to the Board O Use of Enron Stock for Small Acquisitions (<$20M) - Approve for Recommendation to the Board 4. Chief Risk Officer Report Mr. Buy 5. Other Business O Dividend Policy 6. Adjourn *See Addendum for Deal Approval Sheets E0004400923 w p 1 Finin' C^mmi!t fir 1000/JP.1 012600 XH002-00920 ============= Page 4 of 75 ============= 6Z6OO-ZOOHXa wall epue6y ECO04400924 ============= Page 5 of 75 ============= Enron Corp Finance Committee Minutes October 11, 1999 E0004400925 Finance Committee Meeting 1999/JM-10/99 EXH002-00922 ============= Page 6 of 75 ============= DRAFT MINUTES MEETING OF THE FINANCE COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. August 9, 1999 Minutes of a meeting of the Finance Committee ("Committee") of the Board of Directors of Enron Corp. ("Company"), noticed to begin at 4:00 p.m. C.D.T., on August 9, 1999, but actually begun at 4:20 p.m., C.D.T., at the Enron Building in Houston, Texas. All of the Committee members were present, either in person or by telephone conference connection, where each participant could hear the comments of the others and join in the discussion, as follows: Mr. Herbert S. Winokur, Jr., Chairman Mr. Robert A. Belfer Mr. Norman P. Blake, Jr. Mr. Ronnie C. Chan Mr. Jerome J. Meyer Mr. John A. Urquhart Directors Kenneth L. Lay, Charles A. LeMaistre, and Jeffrey K. Skilling, Messrs. Richard B. Buy, Richard A. Causey, David B. Gorte, Andrew S. Fastow, Mark E. Koenig, Theodore R. Murphy, and Joseph ŦW. Sutton, and Ms. Rebecca C. Carter, all of the Company or affiliates thereof, also attended the meeting. Director Ken L. Harrison joined the meeting in progress as noted below. The Chairman, Mr. Winokur, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Winokur called the meeting to order and noted that a draft of minutes of the meeting of the Committee held on May 3, 1999 had been distributed to the Committee members. He called for any corrections or additions. There being none, upon motion duly made by Mr. Blake, seconded by Mr. Chan, and carried, the minutes of the meeting of the Committee held on May 3, 1999 were approved as distributed. Mr. Winokur called upon Mr. Fastow to present the Chief Financial Officer's report. Mr. Fastow reviewed key financial ratios and the investments 3 E0004400926 =XH002-00923 ============= Page 7 of 75 ============= made during 1999 by business unit and compared them to the plan amount. He stated that the plan numbers were not meant to indicate the anticipated expenditures for the year but instead reflected a level of expenditures that would not necessitate additional financing activities. He discussed the status of capital outflows year-to-date and commented on the equity transactions the Company had undertaken. to fund the outflows. He discussed an action plan to add to the Company's liquidity and noted the benefits of making additional asset sales. He reviewed the Company's cost of capital and borrowing spreads and answered questions from the Committee. A copy of Mr. Fastow's report is filed with the records of the meeting. Mr. Fastow then presented the Treasurer's report. He reviewed the liquidity report and discussed financings that had occurred since the May Committee meeting. He discussed the active letters of credit and the guaranty portfolio. He noted that there was no change in the rating summary and added that he was still working on a credit rating upgrade from Moody's. He addressed liquidity stress test analyses that had been performed and potential financing alternatives that could be utilized to address any liquidity issues. He updated the Committee on the potential impact that Year 2000 issues could have on liquidity and year-end closings. A copy of Mr. Fastow's report is filed with the records of the meeting. Mr. Fastow then discussed the proposed issuance of exchangeable notes that are mandatorily exchangeable or convertible into shares of Enron Oil & Gas Company ("EOG") common stock. He stated that the issuance was in accordance with the Share Exchange Agreement between the Company and EOG that was approved by the Executive Committee of the Board on July 16, 1999. Following a discussion, upon motion duly made by Mr. Meyer, seconded by Mr. Blake, and carried, the proposed issuance of exchangeable notes was approved for recommendation to the Board. Mr. Winokur called upon Mr. Buy to present the Chief Risk Officer's report, a copy of which is filed with the records of the meeting. Mr. Buy:began the presentation with an overview of the Company's assets by region, noting the division between "merchant" and "strategic" assets and emerging versus developed markets. He then discussed the Company's Merchant Portfolio and noted syndications, hedges, monetizations, and reserves that offset the Company's total investment. He commented on the Company's credit exposure, with specific emphasis on the top 25 credit exposures and the ten most material non-performing debt instruments.. He reviewed the equity investment portfolio by industry and geographic region and discussed how the investments were performing against expectations. He noted that the Company had recently formed a new restructuring group and he discussed the Company's success, during the period 1994 through E0004400927 :XH002-00924 ============= Page 8 of 75 ============= 1999, in restructuring poorly performing assets. He reviewed the top and bottom ten performing investments and the fair market value write-ups that had been taken during 1999. He answered questions from the Committee regarding the performance of the Merchant Portfolio. Dr. LeMaistre left and Mr. Harrison joined the meeting. 1 Mr. Buy presented the Committee with an update on market risk, a copy of which is filed with the records of the meeting. He reviewed the risk profile, quarterly profit and loss, and value-at-risk ("VAR") of the Company by commodity group. He discussed exposures under a "worst case" scenario of 5%- 25% shifts in commodity prices and reviewed a stress test matrix that identified the impact of changes in price and volatility on VAR. He commented on the volatility in power markets during the second quarter, noting that certain companies within the industry had difficulties performing under their contracts but there was no significant impact on the Company. Mr. Skilling discussed the financial impact of the position the Company had taken in the North American power markets during the late spring and early summer months and the current position the Company had for the remainder of the summer. Mr. Buy reviewed limit violations during the first and second quarters of 1999, noting that there were no violations that required Committee notification. Mr. Buy presented recommended changes to the Enron Corp. Risk Management Policy ("the Policy"), a copy of which is filed with the records of the meeting. He discussed changes in the net open position and/or VAR limits for emission allowances, Australian electricity, and European natural gas and electricity. He also proposed that a new product, "bandwidth", be added to the interim policy section of the Policy as a new commodity group. Following a discussion, upon motion duly made by Mr. Belfer, seconded by Mr. Blake, and approved, the changes to the risk management policy were approved for recommendation to the Board. Mr. Buy then presented recommended changes to the Company's transaction approval process to reflect the addition of Mr. Sutton to the Office of the Chairman and the addition of originated contractual transactions to the process. Following a discussion, upon motion duly made by Mr. Blake, seconded by Mr. Urquhart, and approved, the changes to the transaction approval process were approved for recommendation to the Board. Mr. Buy then presented a recommended revision to the Company's Guarantee Policy to more closely align approvals to those required by the transaction approval process. Following a discussion, upon motion duly made by 5 E0004400928 :H002-00925 ============= Page 9 of 75 ============= Mr. Urquhart, seconded by Mr. Blake, and approved, the revision to the Guarantee Policy was approved for recommendation to the Board. There being no further business to come before the Committee, the meeting was adjourned at 5:30 p.m., C.D.T. Secretary APPROVED: Chairman J:\User\rcarter\a Minutes\1999 Minutes\8999F.doc E0004400929 6 :H002-00926 ============= Page 10 of 75 ============= C) M 0) O 0 d' O O U W Agenda Item 2 EXH002-00927 ============= Page 11 of 75 ============= Enron Corp Chief Financial Officer Report October 11, 1999 E0004400931 14~. '04P Finance Committee Meeting 1999/J M-10/99 :XH002-00928 ============= Page 12 of 75 ============= Key Financial Ratios 5 4 3 2 b 1 1994 1995 1996 1997 1998 1999E 2000E 2001E • - Funds Flow Interest Coverage son Interest Coverage Rating Ranaes* Funds Flow/Interest Interest Coverage Debt/BS Capital FFO/Total Obligations A 4.65 4.15 45.1% 33.5% A- 4.05 3.55 47.9% 30.1% 55% 44 6 45.7 46.3 45.2 45% . 442 428 35% 25% o 0.. 23.4 O 19.9 21.5 9 21.3 19.7 15% 0 " 14.7 15.5--. 0;,r;!" 11.6 5% 1 994 1995 1996 1997 1998 1999E 2000E 2001E -9 Debt/ B/S Capital ;o.= FFO/Total Obligation BBB+ BBB Bbt3- 3.45 2.88 2.34 2.95 2.53 2.28 50.8% 53.6% 56.4% 26.7% 23.5% 20.5% E0004400932 * Ratios are minimums for the related category EXH002-00929 Finance Committee Me1et14. 1999/JM-10/9 1 ~, ============= Page 13 of 75 ============= Long-Term Liability Analysis Fixed/Floating Mix (in $ millions) Balance Sheet (as of 9/30/99 est.) cc Floating Fixed Total Short Term 1,387 7 1,394 Long Term 494 7,073 7,567 1,881 7,080 8,961 21% 79% Off Balance Sheet (as of 9/30/99) Floating Fixed Total 826 - 826 826 - 826 100% 0% Project Debt (as of 6/30/99) Floating Fixed Total 530 8,191 8,721 530 8,191 8,721 6% 94% P/L Sensitivity analysis 50 bps change in interest rate = $11 m after tax ($.013/share) E0004400933 Combined Floating Fixed Total 1,387 7 1,394 1,850 15,264 17,114 3,237 15,271 18,508 17% 83% 00, P Finance Committee eeting 1999/JM-10/9 EXH002-00930 ============= Page 14 of 75 ============= Stock Trading Portfolio Mark-to-Market Basis J EXH002-00931 ENE Stock EOG Stock EOT AZX Position - Thousands of Shares 1/1/99 Purchases Sales 9/30/99 12,012 - (12,012) - - 113500 (11,500) - E0004400934 Finance Committee Meeting 1999/JM-10/99 \1 /\ ============= Page 15 of 75 ============= 1999 Investments to Date (in millions USD) q c -i r. i Actual Plan Over (Under) Transmission & Distribution 100 19 81 Wholesale 3,597 652 2,945 s 1 Retail 467 160 307 Communications 5 5 0 Corp/Other 75 264 (189) 4,244 1,100 3,144 E0004400935 Finance Committee Meetinc 1999/JM-10/99 ~~ =XH002-00932 ============= Page 16 of 75 ============= 3 V Status of Capital Commitments (in $ millions) Commitments to Date: Capital Outflows per 1999 Operating Plan Less: Non Discretionary Capital Discretionary Capital Expenditures to Date: Humpuss (4) Korea (arapaho) Philippine Barge Acquisition Pusan City Gas Company (Papoose) Other (3) CDE Capitalization Panama Privatization Other (5) Other (1) Other (3) Other (4) Panther Project Nebraska Suiza Dairy TRS Repurchases TYCO Other (9) TRS Repurchases Tax transaction (cochise) Rodeo Trakya Debt Facility TRS Repurchases Other (3) Business Unit/ Region 1999 Total 3,021 (1,921) 1,100 Asia Pacific/Africa/China (25) Asia Pacific/Africa/China (243) Asia Pacific/Africa/China (54) Asia Pacific/Africa/China (27) Asia Pacific/Africa/China (28) Caribbean/M.iddle East (72) Caribbean/Middle East (92) Caribbean/Middle East (50) ECI (5) EE&CC (18) E E DC (26) EES (68) EES (120) EES (30) EES (65) EES (71) EES (84) E l (200) ENE E0004400936 (75) EOTT (35) Europe (29) Europe (562) Europe (16) 1( 1 > Finance Committee Meeting 1999/JM-10/99 i EXH002-00933 ============= Page 17 of 75 ============= Status of Capital Commitments (cont'd) (in $ millions) ..L Business Unit/ Commitments to Date: Region 1999 Total Dabhol I & II India (362) Other (5) India (49) Bethlehem Steel Loan North America (50) CoGen Technologies North America (65) East Coast Power Turbine Purchase North America (38) Embryo North America (36) Mariner Sr. Revolver North America (25) Pastoria North America (28) Peakers North America (500) Pittsburg District Energy Facility* North America (27) Powder River II North America (28) Prima Powder River LLC North America (29) Project Escape North America (27) Purchase of Two ABB GT11N1 CTs North America (36) Tribasa North America (27) TRS Repurchases North America (100) Other (27) North America (305) Beaver-Plant Turbines PGE (40) Other (2) PGE (25) Compania Distribuidora de Gas (CEG) South America (38) Elektro South America (404) Other (1) South America (12) Total Deals (4,244) E0004400937 Finance Committee Meeting 1999/JM-10/99 / \I EXH002-00934 ============= Page 18 of 75 ============= Status of Capital Commitments (cont'd) (in $ millions) ~- f J AAA T_a_I Over(Under) Plan Enron Global Finance Transactions Equity Transactions Common Equity Issuance p CoGen Technologies Equity Issuance Day Break Equity Brazil CTA Adjustment Azurix Equity Issuance Total Equity Additions Proposed Cash Flow Transactions Corp North America Emerging Markets Shortfall (Excess) Balance Sheet Capacity 3,144 830 250 500 (626) 252 1,206 1,090 567 161 1,818 [- -8~~ (1) Project Yellow is committed to an additional $15 MM in CAPEX during years 1-5 for which no financing commitment has been made. (2) ECOGAS - Upon the closing date ECT will make an initial payment of $24 MM. Nine months after closing, ECT would make an intermediate payment. A final payment would be made eighteen months after the (3) Project Doyle's remaining progress payments will be settled on 4/1100. (4) Humpuss per DASH $25 MM E0004400938 Finance Committee Meeting 1999/JM-10/99 f~~ =XH002-00935 ============= Page 19 of 75 ============= U, Enron Corp. Funds Flow Management Transactions y (in $ millions) Description Amount Market Timing North America Transactions Kafus Monetization of Equity 98 Private Nov Mariner Revolver Monetization of Loan Facility 24 Private Oct Mariner Convertible Monetization of Convertible 65 Private Oct North America CLO rd 4- CBO Translation J 230 Public Nov East Coast Power Sub Debt Monetization 150 Private Nov Sub Total 567 Emerging Market Asset Sales Promigas Monetization of Stock 105 Condor Nov Centragas Monetization of Stock 40 Condor Nov Guatemala Monetization of Equity 16 Condor Nov Sub Total 161 Enron Corp Transactions Merchant Asset Exchange Creation of Minority Interest for Funds Flow 250 Bank Nov JEDI 1 Stock Leverage Monetization of Additional ENE Stock Value 250 Bank Nov Prepays Commodity Prepay 245 Bank Sep Rythms Monetization Monetization of Value 345 Bank Nov Sub Total 1,090 Total E0004400939 1,818 Finance Committee Meetinc 1999/JM-10/99 l' EXH002-00936 ============= Page 20 of 75 ============= Funds Flow Issue Merchant Investments o Commodity Books E0004400940 JM-10/99- 1 EXH002-00937 ============= Page 21 of 75 ============= Commodity Book Cash Flows as of 9/30/99 USD $500,000,000 $250,000,000 $0 ($250,000,000) ($500,000,000) ($750,000,000) 0 0 0 0 0 0 0 0 0 0 8 ° 8 8 52 8 8 8 8 8 E0004400941 TD-09/99-33 =XH002-00938 ============= Page 22 of 75 ============= Private Equity Strategy o Continued significant capital investment by Enron o Energy and communications investments typically do not generate significant cash flow and earnings for 1-3 years o Limited cash flow to service additional debt o Limited earnings to cover dilution of additional equity o Result: Enron must syndicate its capital investments in order to grow $60,000 $50,000 51,475 $40,000 •0 36,103 , r $30,000 29,350 27,690 ..r $20,000 23,798 22,552 21,132 18,871 17,242 ].5,414 16,137 13,815 $10,000 11,504 11,966 13,239 9,849 10,072 10,312 E0004400942 $0 1990 1991 1992 1993 1994 1995 .1996 1997 1998 -e-Total Assets -*-Total. Assets & Combined Assets of Unconsolidated Affiliates EXH002-00939 ============= Page 23 of 75 ============= Selected Funds Flow/Balance Sheet Vehicles 1993 1994 1995 1996 -Cactus, Cactus 2 Cactus 3 Cash 1 Cash 2 Cash 3 1997 1998 1999 2000 Cash 4 E0004400943 Note: Additional Individual Asset Sales Not Included JM-10/99- 2 EXH002-00940 ============= Page 24 of 75 ============= Cost of Capital* 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% * Calculated using CAPM Model =XH002-00941 E0004400944 Finance Committee Meeting 1999/JM-10/99 1996 1997 1998 1 Q 1999 2Q 1999 3Q 1999 ============= Page 25 of 75 ============= Enron Corp. Borrowing Spreads 230.0- 210.0- 12/31/98 9/27/99 190.0 6/30/99 170.0 .A N v Q. 150.0 130.0 12/31/97 i 110.0 12/31/96 90.0- 70.0- 50.0- 30.0 L y_ N M to (D 1` 00 0) r T N M E0004400945 Finance Committee Meetinc 1999/JM-10/99 EXH002-00942 ============= Page 26 of 75 ============= U.S. Treasury Yield Curve x 8.0- 7.5 7.0 2/31/96 6.5 AD 9/27/99 •~ 6.0 12/31/97 6/30/99 ° 5.5 - 12/31198 5.0 4.5 4.0 C c N N N N N N N d N N 41 5.... r N M et Ln (9 h 00 61 U) N Q M M (O r E0004400946 Finance Committee Meeting 1999/JM-10/99 EXH002-00943 ============= Page 27 of 75 ============= U.K. Yield Curve 8.0 7.5 7.0 6.5 0 6.0 1-0 5.5 5.0- 4.5- 4.0- c 0 ch E0004400947 12/31/96 12/31/97 9/27/99 Finance Committee Meefinc 1999/JM-10/99 :XH002-00944 ============= Page 28 of 75 ============= Brazil Yield Curve V 19.0- 18.0- 17.0- 16.0- 15.0- 14.0- 13.0- 12.0- ~- 11.0 C 10.0 9.0 8.0-7.0-6.0-5.0-4.0-E0004400948 12/31/98 10/99 .7/99 31/96 31/97 Finance Committee Meeting 1999/JM-10/99 EXH002-00945 L L L L Ir L L L L L L d d a) d ~) d 0) d ) ) 0, >- M Ln lD P. CO 0) r N c) ============= Page 29 of 75 ============= LJM1 Update 0 Closed June 30 0 $16 million outside equity raised 0 Forward contract "restructuring" completed 0 Benefits to Enron • $50 million cash payment to Enron increased to $64 million J Rhythm Netconnections swap in the money $164 million for Enron* "• Purchased $15 million equity in Condor - Bridged Project Margaux - Purchased Promigas i t ` - Purchased Sarlux, • Purchased stake in Cuiaba • Services Agreement 0 Positioned as an alternative, optional source of private equity for Enron to manage its investment portfolio risk, funds flow, and financial flexibility *As of September 30, 1999 E0004400949 Finance Committee Meeting 1999/JM-10/99 i, :XH002-00946 ============= Page 30 of 75 ============= Private Equity Strategy v v $60,000 $50,000 $40,000 O $30,000 .E +fl $20,000 $10,000 $0 o Continued significant capital investment by Enron o Energy and communications investments typically do not generate significant cash flow and earnings for 1-3 years o Limited cash flow to service additional debt o Limited earnings to cover dilution of additional equity o Result: Enron must syndicate its capital investments in order to grow 36,103 `/ 27,690 ,.~23~,798 22,552 21,132 18,811 15,414 17,242 16,137 13,815 11,504 11,966 13,239 9,849 10,072 10,312 1990 1991 1992 1993 1994 1995 1996 1997 --*-Total Assets --Total Assets & Combined Assets of Unconsolidated Affiliates 51,475 29,350 E0004400950 1998 Finance Committee Meeting 1 999/JM-10/99 EXH002-00947 ============= Page 31 of 75 ============= v Rationale for LJM 2 Structure i 0 New FASB consolidation rules 0 Better ability to manage risk positions (non-affiliate status) 0 Better ability to manage financial flexibility E0004400951 Finance Committee Meeting 1999/JM-10/99 EXH002-00948 ============= Page 32 of 75 ============= LJM2Summary o Follow-on private equity fund to LJM1„`,;, o Purpose: Alternative, oonal source of private equity for Enron to manage its investment portfolio risk, funds flow, and financial flexibility o Major differences from LJM1: • No forward contracts / value from Enron contributed • No business relationships between Enron and LJM2 at close 10 • Size: target $200+ million institutional private equity • GP investment: 1 % of committed capital o Controls • R. Causey to approve all transactions between Enron and LJM1/LJM2 o Compensation / Disclosure • No compensation from Enron to A. Fastow • LJM2 has typical private equity fund fees and promote • No related party disclosure expected at close. Related party disclosures specific to asset sales probably required. E0004400952 o Finance Committee / Board of Directors action requested • Ratify decision of Office of the Chairman to waive Code of Conduct in order to allow A. Fastow participation in LJM2 as General Partner z\ r • . -1 ~Ip Finance Committee Meeting 1999/JM-10/99 EXH002-00949 ============= Page 33 of 75 ============= Agenda Item RATIFICATION OF DETERMINATION (Suggested Form of Resolutions) WHEREAS., Andrew S. Fastow serves as the Executive Vice President and Chief Financial Officer of the Company; WHEREAS, Mr. Fastow has the opportunity to participate in the formation of an investment partnership (the "Partnership") that would not otherwise be affiliated with the Company; WHEREAS, it is anticipated that Mr. Fastow will serve as the managing partner/manager of the Partnership; WHEREAS, it is anticipated that the Partnership will invest in energy and communications-related businesses and assets, including businesses and assets of the Company; WHEREAS, the Partnership, as a potential ready purchaser of the. Company's businesses and assets or as a potential contract counterparty, could provide liquidity, risk management and other financial benefits to the Company; WHEREAS, the Office of the Chairman of the Company has determined, for the foregoing reasons, that Mr. Fastow's participation as the managing partner/manager of the Partnership will not adversely affect the interests of the Company; NOW THEREFORE BE IT RESOLVED, that the Board hereby adopts and ratifies the determination by the Office of the Chairman pursuant to the Company's Conduct of Business Af airs/Investments and Outside B~:siness Interests of Officers and Employees that participation of Mr. Fastow as the managing partner/manager of the Partnership will not adversely affect the interests of the Company; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. E0004400953 25 (H002-00950 ============= Page 34 of 75 ============= Agenda Item 3 E0004400954 XH002-00951 ============= Page 35 of 75 ============= Enron Corp Treasurer Report October 11, 1999 E0004400955 Finance Committee Meeting 1999/JM-10/99 =XH002-00952 ============= Page 36 of 75 ============= Enron Corp. Liquidity Report as of September 30, 1999 ($000's) Overnight 1-30 Days 31-60 Days 61-90 Days 91 and over Commercial Paper & Uncommitted Lines 1,500,000 Bank Facilities: Multi-currency 92,948 BHF 23,500 Accounts Receivable Facility 60,000 Shelf Registration - Debt 500,000 Shelf Registration - Equity' 300,000 Monetizations: Commodity Books 250,000 Portfolio 1,000,000 2,310,000 Total 1,500,000 92,948 23,500 60,000 500,000 300,000 250,000 3,310,000 1,676,448 800,000 250,000 1,000,000 2,310,000 6,036,448 If C) ' Reflects 7.5mm shares at $40 per share. ' } C-11 E0004400956 EXH002-00953 0 4. p &0 Finance Committee Meeting 1999/JM-10/gg '~~~ ============= Page 37 of 75 ============= 1999 Finance Transactions Business Unit Summary V Business Unit Jan Feb Mar Acr May Jun Jul Aug Sep Oct Nov Dec Total Azurix 0 507 0 686 0 1,047 0 0 150 0 0 500 2,890 Asia 0 0 0 0 0 0 0 0 0 0 0 129 129 Caribbean 0 15 0 0 7 70 0 0 0 0 0 1,140 1,232 Corp 890 0 100 1,280 1,000 631 0 1,500 931 1,900 0 1,600 9,832 EOTT 0 0 0 0 0 0 0 0 235 0 0 0 235 Europe 0 0 362 260 0 81 0 0 116 360 800 2,300 4,279 FI Gas 0 0 0 0 0 0 0 0 200 0 0 0 200 Global Equity Mkts 0 0 0 0 0 0 190 0 1,500 0 0 0 1,690 India 1,868 165 0 0 0 0 0 0 0 0 0 0 2,033 Intl Structuring 0 0 0 0 125 445 0 0 0 0 0 100 670 Middle East 0 0 0 0 0 0 0 0 0 0 0 900 900 N. America 0 0 0 0 0 550 0 0 748 0 978 50 2,326 Northern Border 0 0 0 0 0 0 0 200 0 0 0 0 200 Northern Natural 0 0 0 0 250 0 0 0 0 0 0 0 250 Portland General 0 0 0 0 0 0 0 100 75 0 0 0 175 S. America 0 0 0 0 0 0 0 0 0 0 0 645 645 TOTAL 2,758 687 462 2,226 1,382 2,824 190 1,800 3,955 2,260 1,778 7,364 27,686 EOO04400957 Finance Committee Meeting 1999/JM-10/99 1~ EXH002-00954 ============= Page 38 of 75 ============= Enron Corp. Active Letters of Credit by Category (000's) 9/30/99 6/30/99 3/31/99 12/31/98 Bids $ 64,494 Debt 36,855 N Portland General 2,711 Leases 16,534 Performance . 280,244 Trade 114,342 EOTT 96,921. Other Third-Party ; ' '171,755 Other t f , l 88,271 Grand Total $ 872,127 $ 37,923 $ 3,420 $ 1,493 239,002 222,402 26,605 2,711 2,711 2,711 17,209 17,089 17,329 188,398 159,600 114,440 ------- --- -- 1,084,724 ~ 1,164,231 1,184,103 85,151 85,789 39,929 169,538 170,210 173,163 142,575 41,334 18,909 $ 1,967,231 $199169786 $196585682 E0004400958 ZJI Finance Committee Meeting 1999/JM-10/99 1, EXH002-00955 ============= Page 39 of 75 ============= Enron Corp. Guaranty Portfolio (ooo's) 9/30/99 Trade(Payment and Performance) $15,922,539 EOTT Trade 387,975 Swap Agreements (Master and Individual) 6,739,650 Projects(Non-Debt) 3,444,942 Debt Consolidated Subsidiaries 2,301,319 Unconsolidated Subsidiaries 337,746 Grand Total $29,134,171 6/30/99 $14,787,192 314,175 5,832,985 3,402,900 3/31/99 $14,063,721 396,680 5,482,000 3,154,345 12131 /98 $12,553,735 352,346 4,756,369 2,912,781 197019295 196463045 192419291 267,746 267,746 565,808 $26,306,293 $25,010,537 $22,382,330 E0004400959 0 Finance Committee Meeting 1999/JM-10/99 :XH002-00956 ============= Page 40 of 75 ============= Rating Summary Current Rating Long Term Commercial Paper Standard and Poors BBB+ A2 Moody's Baa2 P2 Duff & Phelps BBB+ D-2 Fitch BBB+ F-2 E0004400960 EXH002-00957 Outlook Stable Stable Stable Stable Finance Committee Meeting 1999/JM-10/99 ============= Page 41 of 75 ============= Moody's Update ,:, V 0 Meetings held on September 8, 1999 Moody's John Diaz - Head of Energy and Utilities Stephen Moore - Enron Analyst Enron Jeff Skilling Andy Fastow Jeff McMahon 0 Purpose - To formally request upgrade to Baal o Result - Moody's has agreed to convene credit committee to discuss upgrade possibility 0 Likely Outcomes - Finance Committee Meetinc 1999/JM-10/99 :XH002-00958 Remove "negative" language Positive Watch Full Upgrade from Enron Analysis ============= Page 42 of 75 ============= Azurix Support Update* 0 0 0 $180 million facility to cover expected G&A expenses for a three. year period (Marlin Transaction) Best efforts $100 million facility for short term credit needs (LC's, guaranties, etc.) Current outstanding - G&A Facility $42 million - Liquidity Facility $25 million (all guaranties) * This transaction was previously approved by the finance committee. This slide is for update purposes only. E0004400962 Finance Committee Meeting 1999/JM-10/99 EXH002-00959 ============= Page 43 of 75 ============= AGENDA ITEM \0. "Shelf" Registration Statement: Increase in Common Stock WHERAS, the Company desires to file with the Securities and Exchange Commission (the "Commission") a registration statement and post-effective amendments (collectively, the "shelf registration statement") for the registration and sale from time to time of shares of Common Stock; and WHEREAS, this Board desires to provide for the issuance and sale from time to time of Common Stock by the Company; RESOLVED, that the Board of Directors hereby deems it advisable and in the best interests of the Company for the Company to issue and sell from time to time up to 15 million (Fifteen Million) shares of its Common Stock, no par value (the "Common Stock") (of which amount 7.5 million shares have been previously registered pursuant to the Securities Act of 1933), at prices to be agreed upon and established by the Special Common Stock Committee referred to below, and to be sold from time to time in public or private offerings; RESOLVED FURTHER, that the Company enter into one or more purchase agreements, underwriting agreements, sales agency agreements, or other agreements, however designated, together with all necessary agreement wires, confirmation letters, or terms agreements (collectively the "Common Stock Agreements"), with such underwriting firm or firms or with such institutions or dealers as may, in the judgment of the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be necessary to effect the sale of the Common Stock; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be, and each of them hereby is, authorized and directed to execute and deliver the Agreements, for and in the name and on behalf of the Company, in such forms as the officer executing such Common Stock Agreements shall approve, such approval to be conclusively evidenced by such execution; and that the Company be, and it hereby is, authorized and directed to perform in full all of its obligations under the Common Stock Agreements; RESOLVED FURTHER, that the officers. of the Company be, and they hereby are, authorized, empowered, and directed to cause to be prepared, executed, and filed with the Commission (i) one or more Registration Statements, including exhibits thereto (collectively, the "Registration Statement"), and (ii) such amendments and post-effective amendments to the Registration Statement or supplements to the Prospectuses constituting a part thereof, and to take all such further action, including the filing of final forms of the Prospectuses, as may, in the judgment of such officers, be necessary, desirable, or appropriate to secure and thereafter to maintain the effectiveness of the Registration Statement; RESOLVED FURTHER, that the Board of Directors of the Company, in accordance with Section 60.354 of the Oregon Business Corporation Act and Article IV of the Bylaws of the Company, as amended, does hereby create a special Common Stock pricing committee (the "Special Common Stock Committee") and designate Kenneth L. Lay and Jeffrey K. Skilling as the members of the Special Common Stock Committee, and that the Special Common Stock Committee is hereby authorized and empowered to determine, for and in the name and on behalf of the Company, the price per share of Common Stock to be received by the Company in the offerings, and any other term of any Common Stock Agreement and all such other matters as may be determined by such Special Common Stock Committee consistent with Oregon law and these resolutions, such Special Common Stock Committee's approval of such terms and conditions to be conclusively determined by their inclusion in the executed copies of any Common Stock Agreements; and that the Special Common Stock Committee is hereby authorized to take any and all action and to do or cause to be done any or all things which may appear to the Special Common Stock Committee to be necessary or advisable in order to offer, issue and sell the Common Stock, to the full extent and with the same effect as the Board of Directors of the Company could take such action or do or cause such things 34 E0004400963 =XH002-00960 ============= Page 44 of 75 ============= to be done; and that a majority of the members of the Special Common Stock Committee shall constitute a quorum for the transaction of business; and that the Special Common Stock Committee shall keep a written record of its meetings, shall present such record to the meetings of the Special Common Stock Committee, and shall file a copy of such record in the corporate minutes of the Company; RESOLVED FURTHER, that the Chairman of the Board, any Vice Chairman of the Board, the President of the Company, any Vice President of the Company, the Corporate Secretary, any Deputy Corporate Seci~'tary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to sign, under the corporate seal of the Company (if required), any or all of the certificates of Common Stock and that the signatures of the aforesaid authorized officers and the corporate seal of the Company (if required) may be facsimile, and that the Company hereby adopts and approves any such facsimile signatures and seal; RESOLVED FURTHER, that the facsimile signatures which appear upon any of the certificates of Common Stock shall be valid regardless of whether such officer ceases to hold such office prior to the issuance of the Common Stock; RESOLVED FURTHER, that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President, and the Senior Vice President and Secretary, any Deputy Corporate Secretary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to take any and all action which they may deem necessary or advisable in order to obtain a permit, to register or to qualify part or all of the Common Stock for issuance and sale or to request an exemption from registration of part or all of the Common Stock or to register or obtain a license for the Company as a dealer or broker under the securities laws of such of the states of the United States of America and of such foreign jurisdictions as such officers may deem advisable, and in connection with such registrations,. permits, licenses, qualifications, and exemptions, to execute, acknowledge, verify, deliver, file, and publish all such applications, reports, resolutions, irrevocable consents to service of process, powers of attorney, and other papers and instruments as may be required under such laws, and to take any and all further action which they may deem necessary or advisable in order to maintain such registration in effect for as long as they may deem to be in the best interests of the Company; RESOLVED FURTHER, that if the officers of the Company determine that it is desirable for the Company to do so, the Company may make application to the New York Stock Exchange, Inc. and one or more other national securities exchanges for listing of the Common Stock in the number of shares issued or reserved for issuance; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be, and each of them hereby is, authorized and directed to execute and deliver on behalf of the Company to the New York Stock Exchange, Inc. or other such securities exchanges such indemnity agreements in such form as may be necessary to effect the aforesaid listing; and that the officers of the Company be, and they hereby are, authorized and directed to execute and deliver any applications, documents, or agreements, to take any and all actions, to appear before such exchanges if necessary, to appoint any banking or other institution as an agent of the Company for any purpose, and to do or cause to be done any and all things as may appear to them to be necessary or desirable in order to effect such listing; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in' their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. 3386rrr.doc 35 E0004400964